Global supply chain redesign

Supply chain strategy

Challenge

The client is a global provider of equipment for mining and construction segment with a turnover of 150 MEUR. Who, for a prolonged time have suffered from long and unstable delivery lead times while having a lot of capital tied in stocks. They understood the importance of reducing both instability in the delivery process as well as the amount of slow-moving stock that were unnecessary kept on hand. An major hurdle for planning and executing any change was the vastness of the organisation, spread out over more than 50 countries and 6 continents, which was one of the reasons we at MYSIGMA were contacted.

Solution

To be more competitive delivery performance and inventory management had to be improved. We introduced new methods for materials management and developed a method to differentiate target service levels and delivery lead times depending on SKU characteristics. Furthermore we redesigned their stock network for both primary and local facilities, which had the added benefit of introducing the client to new sourcing and planning possibilities that were more effective than their past practices.

Impact

The results of our activities led to some remarkable results. The list below speaks for itself.

Reduced replenishment lead time with approximately 80 days for critical component groups

Increased item service levels

Reduced capital tied up with 50% equal to 14 MEUR

Reduced purchasing cost of 9 MEUR

Reduced cost for obsolete stock and cost for stock keeping with 1,5 MEUR